European retailers have been unlikely stock market stars this year, but a long spell of high borrowing costs and inflation has started to bite, so wary investors will be looking for reassurances from the likes of H&M and Zara-owner Inditex when they issue business updates this week.
The snag is that this stellar run has been partly built on investors unwinding bearish bets, or short positions, on retail stocks, after last year's pessimism proved overdone. This means retail stocks might not see as many willing buyers as earlier this year.
"We’d be more worried about fundamental weakness starting to show up more clearly in the coming months". Much of what happens next will depend on how the economy holds up, according to Florian Ielpo, Head of macroeconomics at Multi Asset Group Lombard Odier Asset Management.
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